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 user 2007-01-24 at 3:01:00 pm Views: 55
  • #16936

    Xerox Net Income Declines 24%
    Jan. 07 — Xerox Corp., the world’s largest maker of high-speed color printers, said fourth-quarter earnings fell 24 percent because of costs to fire workers and close plants.Net income slipped to $214 million, or 22 cents a share, from $282 million, or 27 cents, a year earlier, Stamford, Connecticut-based Xerox said today in a regulatory filing. Excluding some costs, profit was 38 cents, beating analysts’ estimates. Revenue rose 3 percent to $4.38 billion, helped by favorable currency translation.Sales of color machines, which generate more profit than black-and-white models, rose 5 percent last quarter, while costs to fire 1,900 employees and move factories hurt earnings by 16 cents. Chief Executive Officer Anne Mulcahy, who has cut 20,000 jobs since taking over in August 2001, is relying on toner and paper to provide a steadier source of revenue than equipment.“I would like higher revenue growth, but there’s only so much you can get out of this industry,” said Naveed Yahya, chief investment officer of Fischer Investment Group in Pittsford, New York, which owns more than 50,000 shares and has held Xerox for more than six years. “If they can get up to 5 percent sales growth, my comfort level would be higher.”Xerox, which competes with Hewlett-Packard Co. and Canon Inc., expects profit this quarter to be 21 to 23 cents a share, compared with the 22-cent estimate of six analysts surveyed by Bloomberg.Shares of Xerox fell 15 cents to $16.55 at 10:31 a.m. in New York Stock Exchange composite trading and had gained 16 percent in the past year before today.

    Laser Printers
    Last quarter marked the third straight period Xerox has exceeded analysts’ projections. Chris Whitmore, a Deutsche Bank analyst in San Francisco, anticipated 36 cents a share, matching the average of seven analysts surveyed by Bloomberg. Sales estimates were $4.35 billion.Since becoming CEO, Mulcahy, 54, has paid down $11.5 billion in debt and hired outside companies to make Xerox products to reduce operating costs. She plans to roll out twice as many new products this year as in 2006.“It was a year of steady improvement across the board, and we’re ready to do it again,” Mulcahy said today on a conference call with analysts and investors.About two-thirds of Xerox’s equipment sales come from products introduced in the past two years. In November, the company started selling three new small-business products, including a desktop color laser printer, and plans to unveil several more office color systems next month.Xerox employed 53,700 at the end of last year, 2.7 percent fewer employees than the previous year. The company incurred $239 million in restructuring and asset impairment costs last quarter.

    Color Systems
    “They’re still realigning their business model,” said Richard Stice, an analyst at Standard & Poor’s in New York, who has a “hold” rating on the shares and doesn’t own any. “They’re making positive steps, hoping to turn around their operations, focusing on the right markets.”Sales of toner, supplies and services rose 6 percent to $2.78 billion last quarter, as demand for color systems and consulting work lifted growth. Total equipment sales slipped 1 percent to $1.39 billion, dragged down by declines in black-and-white products and color printers.Color-systems revenue, which includes copiers, printers and supplies, rose 13 percent to $1.62 billion. In the past quarter, 37 percent of the company’s sales were from color, up from 34 percent a year earlier. A color page is five times more profitable than one in black-and-white.Sales at the company’s production group, which sells high-speed printing systems to high-volume commercial customers, rose 2.9 percent to $1.32 billion. Profit was little changed at $175 million as the company sold fewer higher-priced items.The office group, which sells networked copier and printer systems to corporations, rose less than 1 percent to $2.05 billion. Profit climbed 4.2 percent to $276 million, as the compan
    y installed more color printers that can also copy, scan and fax.